Tuesday, March 4th, 2014
Seoul, Korea - Korea Electric Power Co. will reduce its debt by 14.7 trillion won until 2017 through a restructuring plan. This is 5.1 trillion won higher than that submitted earlier to the government.
The state-run electricity utility announced on March 2 a plan to improve its financial standing that included business restructuring, asset sell-off, cost cutting, profit-making projects, and the use of financial instruments.
With these measures, the company will plan to keep its debt ratio at 143 percent (debt volume of 65.2 trillion won) from 136 percent as of the end of 2013. This is 21 percentage points lower than that proposed in the earlier plan in which the company targeted the debt ratio to 164 percent.
According to the plan, the company will save about 3 trillion won from changing the schedule and size of new business projects. It will dispose of shares of its affiliates such as KEPCO E&C and Korea Plant Service & Engineering except a minimal controlling stake (51%). The shares in companies that are not related with its main electricity business, including Korea Electric Power Industry Development and LG U+, will be sold in their entirety.
Its main office building in Gangnam, whose value is estimated at 3 trillion won, will also be sold, as well as some of the resource development projects ongoing overseas. By selling off these assets, Korea Electric Power will secure 5.3 trillion won in cash. In addition, it will engage in a variety of profit-making projects (300 billion won) while cutting interest payments (1.9 trillion won). The company expected its net profit to rise to 2,202.1 billion won by 2017 from 238.3 billion won last year once the self-rescue plan is under way.
